Blog :: 02-2015

It's All About the Journey...Inspections and Other Fun Things

You’ve successfully negotiated the terms and accepted an offer, now what ?

Well, in short, everything that has been contractually agreed upon between buyer and seller now begins playing out. First, the home is put in a "Continue to Show" (CTS) status alerting agents that while the home can still be shown, there is an accepted offer. The 1% check that accompanied the Binder (accepted offer) is placed in the buyer's agent's escrow account until the point where contracts are signed.

Now we need to fulfill the contingencies, negotiated up-front between buyer and seller, include the following points:

magnifying glass Property Inspection:

Depending on the systems in your house, the buyer customarily has 7 business days to complete all inspections which can include:

* Building/Engineering Inspection - conducted by a licensed property inspector --- from the roof to the foundation-and everything in between. This usually also includes a termite and pest inspection. Other inspections performed can also include a lead test and water test. The test can run 3-4 hours depending on the size of the home.

* Radon Test - radon is a gas that occurs underground and when a house is built it can be "trapped" in the structure. The buyer will most likely do a test which consists of putting a monitoring system in the lowest living level of the house and letting it run for 48-72 hours. The test is then read and in CT, a radon level found under 4.0 picocuries is considered ok.

* Septic Inspection - if your house has a septic system the buyer will hire a licensed septic inspector to check the integrity of the tank (no cracks), and the capacity left on the leaching system.

An inspection that turns up items of concern to the buyers in the home can be grounds for further negotiation or worst case, nullifying the purchase agreement.

real estate contract Contracts:

In lower Fairfield County, CT we use attorneys to draw contracts. Your REALTOR will forward the negotiated accepted offer to the real estate attorney of your choosing and they will draw a contract and send it to the buyer's attorney. Both attorneys will then discuss any terms that need to be discussed, add in any inspection items or credits that arise and the buyer's attorney will have their client come in and sign the contract-usually within 10 business days of the accepted offer. The contract will then be returned with the remainder of the deposit money (up to an additional 9%) that will be held in your attorney's escrow account. The buyer's agent will also send the good faith 1% deposit they are holding to your attorney. You will go in, review the contract and make sure everything is as it should be, and then sign.

mortgage pic Financing:

The buyer must secure mortgage approval and the clock starts ticking as soon as the offer is accepted. The buyer needs to continue the application process they have already started. The signed contract is usually necessary for the appraisal to be ordered, but everything else can get moving right away. The loan will have to be "packaged" when completed and then passed on to the underwriting department for review and approval. This process takes approximately 6-8 weeks.

appraisal Property Appraisal:

If a loan is to be considered for approval, the lending institution usually wants to see that the property is valued at the sale price or higher. They will hire an independent licensed appraiser to do an in-depth assessment of your home - square footage, acreage, condition and upgrades. They will then research sales up to 6 months old that they find as comparable, making adjustments as necessary. They will file their report with the buyer's lender. This is a major part of the mortgage approval process and why it is so important to price your property reasonably. If the appraisal comes in lower than the sale price, one of three things can happen: 1. a renegotiation can take place. 2. the buyer has to come up with more cash or 3. the deal falls apart.

title insurance Title:

The property must have a clear title for a clean exchange of ownership. Your attorney will handle hiring a firm to do a title search. Things that can effect title are outstanding liens on the property or a mechanics lien from a disgruntled past worker. Municipal searches are also being done to make sure all permits have been properly closed out, some of which can date back prior to your ownership. Unfortunately, you are still responsible for putting all permits to rest.

If these contingencies (or any others listed in the purchase contract) are not met, the deal can be nullified and the good faith money returned to the buyer.

Tie Up Loose Ends:

During the escrow period, the buyer should be busy tying up loose ends that might stall or prevent the transfer of property. Homeowner’s insurance, required by the lending institution, must be purchased, local and state regulations pertaining to property transfer must be met.

 

Time to pack!

moving boxes

 

It's All About the Journey...Negotiating and Accepting an Offer

moneyeyes

So you've made it through getting the house ready to go on the market and having to leave the house for showings, and now - you've received an offer! Ideally the potential buyers have offered you full price or more and the perfect terms for the sale. However, just on the off chance this isn't this case, you want to look carefully at all aspects of the offer (not just the price) and begin a negotiation with the buyers and their agent.

Your agent will be your partner and help you evaluate the terms of the offer. Just as you did when determining the asking price of your home, you'll want to see what the market is doing in terms of the offer you have just received.

What are the different parts of the offer?

What does the offer consist of? Generally the following: purchase price; pre-approval letter for the mortgage amount showing that the buyer is indeed qualified to go through with the purchase; dollar amounts of down payments and dates associated with them; dates outlining contingencies such as inspections, contracts & mortgage approval; what's included with and excluded from the sale, all required disclosures signed by the buyer; the name of their attorney (in Lower Fairfield County, CT we use attorneys to draw contracts), a copy of the good faith deposit check (usually 1% of the offer to be held in the buyer's agent's escrow account) and the proposed closing date.

One of the most important aspects of the offer is whether the buyer can fulfill the terms of the contract with financing. Your REALTOR can check on the pre-approval letter that should be included with any offer by consulting with the buyer’s agent and the buyer’s lender.

question mark

What Factors Should You Consider in a Purchase Offer? Before you offer a counter offer here are the questions you'll want to consider:

  • How close is the offer to your asking price?
  • Will your home appraise for the contract price?
  • How large is the earnest money deposit that accompanied the offer?
  • Has the buyer asked for assistance with closing costs?
  • Has the buyer asked you to make repairs or to give a credit for home improvements? (This usually occurs after the building inspection & we will talk more about this in the next blog.)
  • Is the requested settlement date appropriate for your needs?

At this point it is important to decide what your "bottom line" is and then start working towards meeting that through negotiations. Other things to consider are:

  • Are there other offers?
  • Is it smart to wait for more offers to come in?
  • How will you handle it if no other offers come in after a particular deadline?
  • What will you do if you accept this offer and something that sounds more appealing comes in?

Making a Counteroffer

As a seller, you have the option of accepting the offer as is, declining the offer, or making a counteroffer. Your agent can give you specific advice about your negotiating stance based on your home and your market, but generally you will need to be prepared to compromise on some aspect of your home sale. It's always smart to have a dialogue with a potential buyer and see where it can lead.

scales

Your negotiations can go more smoothly if you have a clear sense of your own priorities, such as a particular settlement date, the ability to rent-back your home from your buyers, or a minimum price that is realistic to put the deal together. Your agent should have prepared a document showing you net proceeds at different sales prices that can make it easier to understand the value of different offers.

Negotiations proceed best when both you and your buyer respect each other’s needs and interests and come to an appropriate compromise with the help of your agents.

It's All About the Journey...What's Love Got To Do With It?

 

happy valentine's day

Flowers, candy, red hearts and romance... that's what Valentine's Day is all about, right? Well, maybe not. The origin of this holiday for the expression of love really isn't romantic at all -- at least not in the traditional sense. Instead crime, imprisonment and execution are at the genesis of our modern day love fest, dating back to the man whose martyrdom may have inspired the holiday. There were reportedly three early Christian saints named Valentine, but the one the holiday is likely named after was a Roman priest during the 3rd century A.D. under Emperor Claudius II. The Roman Empire was experiencing massive turmoil at the time. Dubbed the "Crisis of the Third Century" by scholars, this period saw the empire divide into three competing states, with the threat of invasion all around. Claudius II made the unpopular decision to ban marriage among young people, believing that unmarried soldiers fought better than married soldiers. With the Roman Empire hanging by a thread, Claudius needed all the brazen war power he could get.

This is where Valentine comes in; the pesky priest who believed marriage to be a God-given sacrament. Valentine began officiating marriages in secret but was eventually found out and imprisoned. The advent of the Valentine's Day love note may have come about from young children passing Valentine notes through the prison bars, but this may be embellishment to an otherwise tragic story.

saint v

In the year 269 AD, Valentine was sentenced to a three part execution of a beating, stoning, and finally decapitation all because of his stand for Christian marriage. The story goes that the last words he wrote were in a note (professing his love?). He inspired today's romantic missives by signing it, "from your Valentine." The priest was named a martyr by the Church because he gave up his life to perform the sacrament of marriage: for love of love and love of God.

At the end of the 5th century, Pope Gelasius I declared February 14th to be St. Valentine's Day, and centuries later romantic authors like Geoffrey Chaucer and Shakespeare helped seal the deal with references to the day in their works.

By the Middle Ages, Valentine became one of the most popular saints in England and France. Despite attempts by the Christian church to sanctify the holiday, the association of Valentine’s Day with romance and courtship continued through the Middle Ages. The holiday evolved over the centuries. By the 18th century, gift-giving and exchanging hand-made cards on Valentine's Day had become common in England. Hand-made valentine cards made of lace, ribbons, and featuring cupids and hearts began to be created on this day and handed over to the man or woman one loved. This tradition eventually spread to the American colonies. It was not until the 1840s that Valentine's Day greeting cards began to be commercially produced in the U.S. The first American Valentine's Day greeting cards were created by Esther A. Howland, a graduate and native of Worcester. Mass. Howland, known as the Mother of the Valentine, made elaborate creations with real lace, ribbons and colorful pictures known as "scrap". It was when Howland began making Valentine's cards in a large scale that the tradition really caught on in the U.S.
vintage card
In the second half of the 20th century, the practice of exchanging cards was extended to all types of gifts. Such gifts typically include roses and chocolates packed in red satin, heart-shaped boxes. In the 1980s, the diamond industry began to promote Valentine's Day as an occasion for giving jewelry. Today, Valentine's Day is one of the major holidays in the U.S. and has become a booming commercial success. According to the Greeting Card Association, 25% of all cards sent each year are "valentine's". The "valentines", as Valentine's Day cards are better known as, are often designed with hearts to symbolize love.
chocolate and roses

And then there's Cupid... Valentine's Day would not be complete without Cupid, the most recognized symbol of love. It is said that if Cupid shoots his arrow of love and hits you, that you will fall helplessly and madly in love with the next person you meet.

In Roman mythology, Cupid is the son of Venus, the goddess of love. In Greek mythology, he was known as Eros and was the son of Aphrodite, either way - good genes.

cupid

According to Roman mythology, Cupid fell madly in love with Psyche despite his mother's jealousy over Psyche's beauty. Even though he married her, he also told her never to look at him. He visited her only at night. Her sisters convinced her to look at Cupid despite his warning. So she lit a lamp one night so she could see him. Cupid then left her.

Psyche wandered aimlessly for a time, searching in vain for Cupid. She happened upon the temple of Venus. Venus, looking to destroy her, gave Psyche a series of perilous tasks, each one more difficult and previous than than preceding one. Her final task was to deliver a little box to the underworld and get some of the beauty of Proserpine. She was warned not to open the box. But again, curiosity overcame her and she opened the box. There was nothing in the box but deadly slumber. (Don't despair, this story has a happy ending!)

Cupid, who really loved Psyche all the while, came upon her lifeless body. He forgave Psyche and swept the deadly slumber back into the box. The gods then made Psyche a goddess.

At this point it is appropriate to say "and they all lived happily ever after". Oh, by the way, if he hits you with one of his arrows, you too will live happily ever after!

Did you know? Cupid is sometimes shown blindfolded. Why?...Because love is blind!

 

 

 

 

It's All About The Journey...You've Listed Your House-Now What?

raveis for sale sign

Selling your house can be a lot like remodeling: It usually takes longer, costs more and is more emotionally draining than you thought it would be, but in the end it was worth it! Unless you’re the rare home owner who gets multiple offers above the asking price days after listing, the sales process can be emotionally challenging. Knowing what's ahead helps ease some of the anxiety that goes along with the process. Generally, you can expect a three-step process: Getting the house ready, showing it off and responding to the marketplace.

First Things First: One of the first things your agent will do is place your home in the local Multiple Listing Service (MLS). This notifies all other agents in the area that your home is for sale. Your house will also appear on numerous websites such as Raveis.com; Realtor.com; and so many more.

The for-sale sign will appear in the front yard and a lockbox will be attached to your house, most likely on the front door. The lockbox allows agents access to your house for showings and also alerts your listing agent who is entering your house through satellite communication. You may think it would be easier for you to be home & let the agents in, but it is best if you are out of the house during showings (see below), and a lockbox allows a secure way for the agents to gain access. Showing instructions can be set up to work with your life style, especially if you have small children or pets.

Open Houses: The most important activity, right out of the starting gate, is the Broker Open House. This is set up on specific days with time frames relating to different geographic areas. Most active agents use open house days to keep current on the housing inventory as it comes on the market. Usually your agent will serve refreshments and use this time to encourage other agents to share their thoughts on how the house shows and how accurate the pricing is as compared to other homes their buyer clients may be looking at, allowing for many perspectives. This is why when you go "live" you should make sure you're completely ready for showings - "you only have once chance to make a first impression". You’ll probably be swamped with last-minute touch-ups and clean-ups to get the house ready but it is worth every minute of time you spend!

Next, if you and your agent agree this is something you are comfortable with, there will be a public open house traditionally held on a Sunday afternoon. These are advertised both in the newspaper and most importantly, on the internet. This allows buyers to search for properties in their price range and visit, (or re-visit), on their own time frame.

It is best if you are not present during showings and open houses. Buyers want the freedom to look around and make comments. If you are home when potential buyers come for a viewing, try to step outside while they tour your house. Many sellers incorrectly think that multiple open houses are needed to sell a house. In fact, few homes are sold at open houses, but there are many good reasons to have them.

Traffic Patterns: You will get the most traffic in the first two to three weeks after your house is listed. Anyone looking for a house like yours has probably viewed all of your competition and will be anxious to see your home since it is a new consideration. Don’t fret when the traffic dies down. The average days on market (DOM) can be 60-90 days in a normal cycle, depending on the area, price range and current inventory. In a slower market, buyers can take their time and usually do. If you have buyers come back a second or third time, it's usually a good sign. Any offers - even ones you consider to be "lowball offers" - have a chance of being negotiated and potentially leading to a sale, so always be open to discussion.

Marketing Your Home:

Your agent should have a multi-dimensional approach for the marketing of your home. A widespread internet presence with quality pictures and an enticing description are some of the most important aspects of the marketing plan. The reach on the internet should be through multiple avenues - websites and MLS search sites just to name a few. The marketing should not however only focus on the internet. Potential buyers are everywhere and your agent's specific plan for your home should hit multiple arenas - print, mail, social networks, visual tours, and the list goes on & on!

According to the Employee Relocation Council - Moving is the third most stressful event in life, following death and divorce. It is important to be partnered with an agent you trust, who can help make the process go as smoothly as possible. Let me know how I can help, I would love to chat!